Already have a project budget? Measure what that budget earns. Compare the dollar profit, return on total cost, and the annualized equivalent of the holding period.
ROI = net profit ÷ total project cost. Annualized ROI = (1 + ROI)^(12 ÷ months) − 1.
WORKED EXAMPLE
A $180,000 purchase, $40,000 rehab, $5,000 closing, $10,000 financing and holding, and $21,000 selling costs total $256,000. Selling for $300,000 produces $44,000 profit and a 17.19% return on cost. Over six months, the compound annualized equivalent is about 37.33%.
Measure return on the whole project
Enter the purchase, renovated resale value, and every project expense once. This calculator divides net profit by total project cost, including selling costs. That denominator makes it a return-on-cost measure rather than a return-on-down-payment measure. Financing and holding are entered as a total dollar amount, so you can use a lender quote or carry over a budget prepared in the more detailed flip calculator.
Interpret annualized ROI carefully
Annualization translates a holding-period return into a compounded yearly equivalent. It helps compare projects with different durations, but it assumes the same return could be repeated and reinvested over a year. It does not forecast that another property will be available immediately, that the next project will earn the same margin, or that cash will be fully invested all year. For a short hold, annualized percentages can look large even when the actual dollar profit is modest.
Use profit and duration alongside the percentage
A high percentage on a small budget may not meet your dollar-income target. A longer project can tie up capital and consume more management time even if it produces a similar profit. Compare deals using the same expense definitions and realistic completion dates. This model is before income taxes and does not estimate cash-on-cash leverage. Use the financed flip calculator when the amount of borrowed money and pre-sale cash needed are central to the decision.
A LITTLE MORE CLARITY
Frequently asked questions
Is ROI based on my down payment?
No. This page uses total project cost, including purchase and modeled expenses. It is not a leveraged cash-on-cash calculation.
Why does annualized ROI exceed project ROI?
For a profitable hold shorter than a year, the formula shows the compounded equivalent if the same return could be repeated. That is a comparison convention, not a promised annual return.
Can the result be negative?
Yes. If total costs exceed the sale price, profit and ROI are negative. Losses remain visible instead of being rounded up to zero.
